Posts Tagged ‘leadership’

We all have our moments of discouragement.  There are times when we are getting beaten up so badly that we would rather throw in the towel than continue to get pummeled.  This situation can occur in just about any area of our lives…personal and professional.  But what do you do when it happens in your nonprofit?  How do you know when to press on or when to give it up?

As it happens, I had this very conversation a few days ago with an acquaintance of mine who runs a small nonprofit ministry.  He and his wife started the organization about 15 years ago and what little momentum they had back in the early days has long fizzled out.  They find themselves practically alone in keeping it going.  Anymore, they are struggling to figure out why they even keep on trying.  Bill is very discouraged and, for the first time, is seriously thinking about hanging it up.  Maybe you are there, too.  How do you know what to do?  Predictably, the answer is not so simple.

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Founder’s syndrome.  It affects nonprofits and for-profits alike.  And it can be crippling to any organization.  Understanding what it is and how to avoid it is crucial to the future of your 501(c)(3).

Taken from that most-reputable of sources, Wikipedia, founder’s syndrome is defined as, “a pattern of negative or undesirable behavior on the part of the founder(s) of an organization”.  While that can be true, we find that most cases of founder’s syndrome within nonprofits simply involve a founder with too much influence.  In plain English, it means that the universe revolves around the founder…and not in a good way.  Here is an example of the way it usually works:

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2009 is rapidly coming to a close.  And once again, we find ourselves amazed at how fast the year has gone by.  Funny how we have this conversation every year, but we act like it’s the first time it went by this fast.

Just as December 31 rolls around every year, so does the need to plan for your nonprofit’s year end.  With only a few weeks left in the year, don’t put off until later some of the most important things you need to be doing right now.  Let’s take a look at some key, year-end necessities.

Strategic planning. The economic uncertainty of the past year has forced many nonprofits to shift gears and even change course.  For some, it has caused an existential crisis!  What has the economic downturn meant to your organization?  The end of the year is a natural time to (re)evaluate what you are doing.  Focus on maximizing impact for a minimum of expense.  Easier said than done, no doubt.  But now more than ever, it is imperative to be intentional with everything you are doing.  “Winging it” is ineffective in the good times.  It could be fatal in the bad times.

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Boo!

Halloween is upon us…and there is no more appropriate topic that we could cover than how to effectively scare away donors.  In the, um, spirit of the season, let’s look at six ways to guarantee donors will want nothing to do with you!

Be undefinable. Keep ‘em guessing, we say.  Why box yourself into a specific purpose when you can be fluid and flexible…you know, all things to all people.  You need the freedom to pounce on whatever new cause-de-jour comes along.  Let those other nonprofits label themselves.  Not you, though…you be a chameleon.  Keep changing it up.

Be ineffective. Boy, this one gets them every time.  If you want to make a really bad impression, just refuse to accomplish anything measurable.  Rely on grand platitudes and empty rhetoric.  Plan constantly, but never, ever get anything done.  That’s waaaay too much work.  Hey, I know…just pretend you are a congressman!  Talk the talk, then talk some more!  With a little practice, you’ll be a pro at kicking the can down the street.

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The honeymoon is over.  It seems like yesterday that everyone was full of passion, vision and warm fuzzies.  You were going to save the world and nothing could stand in your way.  Now, passions have cooled, visions have diverged and the warm fuzzies have been replace with contempt and backbiting.  How did things go south so quickly?

Operating a business, especially a nonprofit, is a lot like a marriage…minus the romance.  What starts out with mutual respect and unity of purpose can descend into open hostility.  And, it can threaten your organization’s effectiveness…even its very existence.  Conflict management is an essential skill that every nonprofit leader must learn and utilize.  What follows are some key points to consider regarding effective conflict management:

Conflict is inevitable. Learn it, live it, love it.  The sooner you dispense of the notion that conflict can be avoided, the sooner you can manage the realities of it.  Conflict is inevitable because people are involved.  And where there are people, there will eventually be conflict.  Just like in marriage, you and the other leaders in your organization have different ideas, backgrounds and experiences.  These all color the way you approach life, including your approach to running your nonprofit.

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No decision you make regarding your nonprofit organization carries more importance than who is chosen to lead it.  The members of your board of directors make up the governing body of your nonprofit and are legally accountable for its actions.  Practically speaking, they are accountable to your supporters and beneficiaries to oversee the accomplishment of the organization’s purposes.  The buck stops with them…at least it is supposed to!  But that’s another article.

If you are just starting out, who should be asked to serve?  And, if your organization is already established, and vacancies on the board need filling, who should replace the exiting members?  These are questions that are asked by clients of ours quite frequently.  Understandably so.  Concerns of competency, trust, experience and compatibility loom large and demand answers.  In this article, I will attempt to answer these questions, looking first at the issue of installing an initial board, followed by a look at subsequent board positions.

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Bad seeds?

The Association of Community Organizations for Reform Now, aka ACORN, was, until the past year, a relatively unknown organization to most Americans.  Founded in 1970 and based in New Orleans, Louisiana, ACORN’s most visible face is that of a 501(c)(3) public charity ostensibly advocating for low- and moderate-income families in the areas of neighborhood safety, voter registration, health care, affordable housing, and other social issues.  ACORN also has a non-charitable arm that lobbies for primarily left-wing causes and candidates, as well as dozens of affiliated splinter groups.  ACORN’s “charitable” division receives millions upon millions of dollars in federal grant money each year.

ACORN’s profile increased dramatically during last year’s presidential campaign, with then-Senator Obama’s candidacy and subsequent victory, himself having been a community organizer with close ties to the group.  The problems for ACORN started when numerous chapters were busted for voter registration fraud.  Estimates go as high as 400,000 falsely registered voters, including Mickey Mouse and Paul Newman.  ACORN’s voter registration program is under investigation in 14 states, with over 30 indictments having been handed down so far with likely many more to come.

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One of the most challenging situations your nonprofit organization can face is the need to expand.  It is also an exciting challenge.  Compared with the alternative of diminishing effectiveness and shrinking support, growth is a good thing.  At least it means (usually) that your programs are having a positive impact and people are motivated about your organization’s cause.

But with expansion comes growing pains.  To significantly increase your footprint or your scope (or both!) requires a huge commitment on the part of the leadership, members, staff and volunteers.  When your organization is faced with opportunities that scream “Take action!”, there are critical things you must consider.  In this post, we’re going to take a look at two scenarios:  1) location expansion and, 2) additions to program services.  Knowing what to do in these situations can spell the difference between success and failure.

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Bernie Madoff heads for prison

Fraud is a word that conjures up many images in your mind.  Maybe your definition of fraud is someone lying to you, stealing from you or conspiring against you while pretending to help you.  All of these are true…and it can happen to your nonprofit if you don’t know how to protect it.

Those who seek to harm or defraud you can come from both inside and outside your nonprofit.  Either can be devastating to the health of your organization, both financially and psychologically.  Let’s take a look at both scenarios and I’ll give you some tips on how to avoid becoming a victim.

Outsiders. For anyone who hasn’t been victimized by an outsider, it can seem like a remote concern.  “Surely we can spot a scam”, you tell yourself.  Ask any victim of Bernie Madoff how easy it is to be taken.  Just among our clientele at The Foundation Group, we have a Florida nonprofit that invested its entire endowment in a sure-thing Madoff fund.  It’s all gone…every penny.  Granted, this one was hard to spot.  Madoff made-off for many years right under the noses of regulators!  But it doesn’t take a Bernie Madoff to cause severe damage to your organization.

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The concept of who owns a nonprofit organization can be hard for some to grasp, especially given that the answer is, “No one…and everyone!”  We encounter this confusion with new clients on a fairly regular basis.  And, given people’s understanding of how basic business operates, it is understandable.  In order to fully appreciate the concept of “non-ownership”, it is helpful to first talk about the various types of business entities.  Then, we’ll look at organizational purpose.  By the end of the article, it should make a lot more sense.

There are several different types of business entities.  For-profit companies make up most of them.  Here are a few (there are others)…all of these have an owner or owners:

Sole Proprietorship: One person who conducts business for profit.  The sole owner assumes complete responsibility for all liabilities and debts of the business.

General Partnership: Two or more individuals as co-owners of a for-profit business.

Corporation (for-profit): The corporation itself assumes all liabilities and debts of the Corporation.  A corporation is owned by shareholders.  A shareholder enjoys protection from the corporation’s debts and liabilities.

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Occasionally, you have to protect people from themselves.  Even those with the best of intentions can mess things up so badly that it can jeopardize what they are trying to accomplish.  In the nonprofit world, there are best practices, good practices and acceptable practices…and, really, really bad practices that will cause your organization, its board, donors and beneficiaries headaches galore.  This week, we are going to explore the Dirty (Half) Dozen Nonprofit No-Nos, in no particular order.  We will limit our discussion to 501(c)(3) nonprofits.

1.  Dictatorships. If you want to be your own boss and run the show as a benevolent dictator, then by all means, go start a business.  Just don’t start a nonprofit organization.  What many people fail to understand before they establish a 501(c)(3) organization is that nonprofits do not have shareholders, i.e., owners…only stakeholders.  Stakeholders can be defined as an organization’s board of directors, its members and its beneficiaries.  No one can legally assume ultimate control.  In fact, the IRS requires tax-exempt organizations to be structured such that control rests within a group of individuals.  This protects everyone involved.  Many times we’ve seen placeholder boards who basically rubber-stamp every decision made by a dictatorially-inclined president or executive director.  That does everyone a disservice.  Even worse, the IRS will hold all the leaders accountable for the governance and management of the organization, not just the dictator.

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Your board of directors is one of the most important assets your nonprofit has.  Assuming they understand their role and are there for the right reasons, your board members provide invaluable insight, direction and oversight.  They volunteer their time and expertise, usually for little more than a pat on the back.  They also assume a certain level of liability in exchange for their efforts.  The old phrase, “No good deed goes unpunished”, is not something you want to see come true.  Let’s explore how to protect those who give of their time to your organization.

Understanding the issues. The first step to properly protecting your board members is to educate them as to what they are responsible for.  It is discouraging to see the level of ignorance that many boards operate under.  We frequently encounter boards where some members are merely placeholders who are doing a favor for the founder.  They rarely participate in substantive discussions or planning, nor are they consulted with by the program director.  They have no idea that there is any liability to them, but there is.  This liability usually falls into three categories:  1) corporate (state), 2) federal (IRS) and, 3) general liability.  Let’s take a closer look at each:

1. Corporate liability:  Board members are the legal, governing body of a nonprofit corporation.  They collectively represent the organization and its interests.  Each nonprofit corporation is incorporated in a particular state, according to that state’s corporate law.  Board members are responsible to make sure the corporation follows state law and that it follows its bylaws.  It is not terribly uncommon to hear of court cases involving other board members, or members of the public, accusing the organization of not abiding by its bylaws.  And, if the corporation is an employer, the board members have a fiduciary responsibility to ensure that employment taxes and related things are properly handled. Read the rest of this entry »

It often seems that when otherwise business-savvy individuals become involved in a nonprofit organization, they set aside all they ever learned in business and proceed to operate their nonprofit as if business rules do not matter.  As most soon find out, they matter a lot.  In this post, let’s take a look (in no particular order) at 10 business basics that nonprofits ignore at their own peril.

Money. This may come as a shock to some, but being “nonprofit” does not, cannot, mean NO profit.  With the notable exception of GM, AIG and a few others, a business must make a profit to survive.  Your organization is probably not on Geitner’s list for TARP funding, so red ink should be regarded as impending doom.  With the uncertainty of this economy, you simply must be solvent.  You and your board may have to make some tough decisions.  Some programs may have to be scaled back or eliminated.  Fundraising must become even more focused and intentional.  I won’t repeat a lot of what we’ve discussed recently concerning funding…suffice it to say you must keep a lid on overhead…now more than ever.

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In last week’s blog post, we looked at a set of core principles that are critical for nonprofit organizations needing to raise financial support.  If you haven’t read it yet, check that one out before diving into this one.  It will make the ideas discussed below more effective.

So, what are some funding strategies that work?  Let’s explore four categories of fundraising:  direct appeal/pledging, professional programs, self-directed programs and grant funding.

Direct appeal/pledging. With this type of fundraising, you are literally asking people to give money to your organization, either through an individual gift or a pledge.  This is the simplest and most direct method of funding your nonprofit and it should be a component of most funding plans.  To be effective, however, you must be able to clearly articulate your program’s purpose and why someone should support it.  This requires your program to be a more attractive target for someone’s giving than some other cause.  I would again recommend you read last week’s blog article for a refresher on getting your pre-funding ducks in a row.  After convincing someone to donate, you must maintain a consistent stream of communication with your donors, keeping your program before them on a regular basis if you want them to continue supporting you.  That can be done through a variety of creative methods, one of the best being monthly newsletters.  Technology has made this so much easier and cheaper, too.  Instead of the hassle of dealing with printed material and postage costs, you may wish to consider a number of online communication tools that allow you to send newsletters, promos, etc. via email.  We like Constant Contact for this purpose.  You can also check out Aweber and some others.  All are similar in features and price.  They all come with pre-designed templates that make it simple to create good looking communications.  Another often-overlooked tactic is to send a receipt/thank you letter for every donation, not just at the end of the year.  Just remember that donor cultivation is a never-ending process.  As soon as you start letting that slide, you’ll see your support slide right with it.

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It is the burning question of every nonprofit organization:  “How do we get funding?” With the economy in the dumps, and recovery looking like a distant hope, this question screams for an answer.  In fact, we get more requests from newsletter subscribers for articles on funding than just about any other topic.  The purpose of this article is to do just that, but maybe not like you expect.

We could present an article on the how-to of bake sales or silent auctions or raffles.  We could lay out, point-by-point, the best method for putting on a first-class consignment sale or Spring Fling carnival.  We could wax eloquent about the best practices of grant writing…and we probably will discuss all these things later on.  But for now, we would rather challenge you to think about the bigger picture.  We believe it will provide a much better environment for specific ideas to flourish.

So, what does it take to get funding?  Let’s look at several, key concepts.

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